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Would the Trans-Pacific Partnership Boost Drug Prices and Endanger Access?

Written by R. Sam Barclay
on
June 12, 2015

What impact will the TPP have on the cost of medications in the U.S. and around the world?

One in four people in the United States over the age of 45 takes statins to lower their cholesterol levels. The leader of the statin pack has been Lipitor, the top-selling drug in global history, which achieved nearly $14 billion in sales in 2006. To achieve such hefty profits, Pfizer sold the drug at costs that, for some, exceeded $3 a day. When Pfizer’s patent expired in 2011, new generic versions of the drug rushed to the market and the price fell to less than $1 a day.

The difference is even more dramatic for HIV medications. In 2001, brand-name HIV drugs cost $10,439 per person per year, compared to generics that cost just $350.

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Currently, a patent lasts for 20 years, giving drug companies ample time to reap the rewards of their drug research. After a patent expires, other companies are free to manufacture the same drug. That lowers prices, making medications more affordable.

But the Trans-Pacific Partnership (TPP) may change that system.

The U.S. House of Representatives vote today means Congress will have an opportunity to make changes to the agreement President Obama is negotiating, but there’s no guarantee that controversial patent protections in the agreement wouldn’t remain.

What Would TPP Do?

Currently, the United States and 160 other nations belong to the World Trade Organization (WTO), which oversees the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Through TRIPS, all participating nations agree to honor these 20-year drug patents.

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However, there are some exceptions. Under TRIPS, countries that lack the ability to manufacture drugs they need can get a compulsory license that essentially allows them to ignore another country’s patent and import patented, brand-name drugs at generic drug prices. In practice, this means developing countries can get access to new life-saving medications right away, rather than waiting two decades for the drugs to become affordable.

Although it has its flaws, this system has struck a balance between enabling drug companies to turn profits and helping people get the medicines they need to live.

Under the TPP, corporations could take steps to bypass local laws in other countries if they are bad for business – for example, an American-owned industrial plant in Vietnam could refuse to respect a local law about dumping toxic waste if they could successfully argue that the costs of safe waste disposal would harm their profits.

The TPP, if ratified, would affect 12 countries around the Pacific Rim, including the United States.

In the case of pharmaceutical patents, the TPP appears to offer much stronger protections for drug companies than those set by TRIPS. Patents could be extended beyond 20 years, delaying the rate at which generics can come to market, for example. Poor countries would also have reduced ability to get brand-name drugs at generic costs. Medicare and other government programs around the world could also lose their bargaining power to get generic drugs at reasonable prices.

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There are more provisions to beef up patents in ways that global health advocates fear will hurt patients. A wider range of drugs would be eligible for patents, including “me-too” drugs that don’t improve the effectiveness of existing drugs. Some surgical and diagnostic techniques could also be patented, meaning doctors could only use the methods if they paid the patent holder. Provisions that would protect data would also force drug manufacturers looking to introduce a generic drug to conduct their own safety and efficacy studies, which costs money and exposes patients to added risk.

“The TPP proposes to strengthen, lengthen, [and] broaden the pharmaceutical industry’s monopoly protections,” said Peter Maybarduk, director of the Global Access to Medicines Program at the U.S. good governance group Public Citizen. “That will limit generic competition and therefore access to affordable medicines for all the countries involved.”

These concerns were echoed by Doctors Without Borders in a letter to President Obama, warning “unless certain damaging provisions are removed, the TPP has the potential to become the most harmful trade pact ever for access to medicines.”

Long-Term Versus Short-Term Access to Drugs

The debate over the pharmaceutical provisions boils down to a conflict of perspective. Which is more important: getting existing drugs for treatable conditions to people who need them now, or researching new drugs to treat the many still incurable diseases?

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The drug discovery process is incredibly expensive. It costs about $2.6 billion to bring a new drug to market, according to a Tufts University study. About a third of those expenses go to basic safety testing before the drug ever reaches humans. And 9 in 10 of the drugs that go through this testing fail in human trials.

For pharmaceutical research to make sense financially, there has to be a reasonable expectation that the few drugs that do prove useful will turn a handsome profit.

“The many provisions that affect pharmaceutical companies seek to encourage innovation and give companies that invest in research the certainty that investors need to continue their involvement in the process,” said Mark Grayson, vice president, communications and public affairs, of the Pharmaceutical Research and Manufacturers of America (PhRMA), in an interview with Healthline. “We believe this ... will ensure that consumers will have the medicines sooner to treat or cure many deadly diseases.”

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Maybarduk takes a very different view of the pharmaceutical industry.

“All that money that they need to ‘be secure’ is money that comes out of our pockets,” he argued. “It certainly doesn’t make families more secure, people caring for sick relatives more secure. Medical illness and drug prices are the leading driver of personal bankruptcy in the United States. Internationally, drug prices lead to a considerable amount of suffering and death every year, because companies tend to find they make more money selling at high prices to the few than affordable prices to the many.”

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Maybarduk also questions whether pharmaceutical companies are delivering on their promise to fund more research with their drug profits.

“They’re putting in maybe 12, maybe as much as 18 cents on the dollar in R&D. They spend more on marketing than they do on R&D,” he said.

“None of the provisions will affect Medicare, Medicaid, or the VA,” he said. “The [patent] provisions do not alter the pricing programs in any of the 11 other countries.”

So What’s the Truth?

Healthline would have verified these facts, but there’s one problem: the text of the TPP is secret. Only trade officials, Congresspeople, and staffers with sufficient security clearance have been allowed to view its terms. All opinions expressed by other parties thus far are on the basis of the negotiating team’s reports, or on the Wikileaked version of the text, which appear to differ substantially from each other. The Office of the United States Trade Representative was not available to offer any comment.

A fast-track vote in the House of Representatives would put the existing (secret) text of the TPP on the President’s desk as-is, with no more room for amendments. The no vote means that Congress will be able to try to amend any agreement the President makes.

Maybarduk thinks that before such pharma-friendly policies are signed into law, the pharmaceutical companies should have to prove that they’re really necessary.

“We should compel the companies to show us how the rules they’re asking for will increase R&D investment, which is the one thing we really want from those companies, and then ask if that’s an efficient enough use of resources to make it worthwhile,” he said. Otherwise, the human interest in getting generic drugs to market now is a more compelling interest.

But Grayson thinks that pro-pharma provisions in the TPP are necessary.

“The TPP, if done correctly, will encourage research in a large portion of the world,” he said. “This is not just good for the people of the U.S. or the other 11 nations that are party to the agreement, but will be available to all the rest of the world’s population.”